Payments unicorn Brex is withdrawing its industrial loan company (ILC) bank charter application to allow it to “modify and strengthen” it and resubmit at a future date.

Why should we care?
Brex, a corporate card and payments company valued at $7.4B, applied for an ILC charter in Utah in February in order to expand its suite of financial products and business software. An ILC charter, according to a company statement at the time, would allow Brex to offer credit solutions and FDIC-insured deposit products to small and medium-sized businesses. The withdrawal of an ILC application – with the intent to refile – is a route others in the space have taken in the past. Since the Federal Deposit Insurance Corporation (FDIC) approved deposit insurance for Square and Nelnet in March 2020, other fintechs have sought ILC charters due to the perceived lighter regulatory burden compared to national bank charters. Commercial entities can hold ILCs without being subjected to direct oversight from the Federal Reserve. The rush of interest in ILCs from nonbanks, however, is facing considerable pushback from many in the banking industry who claim ILCs blur the lines between banking and commerce.